Chris Stoddard and the Tiebout Model of Local Expenditure

Chris Stoddard, in one of his articles, wrote a summary of the Tiebout Model or Tiebout Theory. He was able to touch on three things that are very important to the Tiebout model of local expenditure. These three things are the concept of the Free Riders, Preference Revelation and Preference Aggregation. These things will be discussed in this article to help put the economic theory of Mr. Tiebout into perspective.

Being a summary, Chris Stoddard's article had very limited explanations as to what free rider, preference revelation and preference aggregation were. Free riders, in economic terms, are people who consume more than their fair share of resources or goods and services. These can also be people who shoulder less than a fair share to produce these goods and services. These people are usually associated with the issue of the "free rider problem", an issue addresed by Mr. Tiebout in his article about local expenditure. The origin of the term is rooted in the literal meaning of the words - free riders are people who do not pay for their fare while riding a public transport. Obviously, local expenditure will be greatly affected if there a lot of free riders. This will make the system unable to operate due to a lack of funds.

Preference Revelation, or the Revealed Preference Theory, is a theory developed by the economist Paul Samuelson that states, a person's preferences are revealed by his or her purchases. This preference revelation is important to the Tiebout Model because to be able to offer the goods or services efficiently, local governments should be able to identify the different preferences of the members of its community. In so doing, it can focus its resources on these goods and services, helping local expenditures become more cost-effective in the long run.

Preference Aggregation is also very important to the Tiebout model. This concept means that certain individuals would reveal their preference and that their preferences are what sets them apart from other individuals. These differences in preference is of great help when trying to address local expenditures because in this way, when local governments are working like normal markets, local governments can adjust what services they can readily offer based on the needs of their specific target market, in this case, the members of their community.

Chris Stoddard's overview of the Tiebout Model is of great significance since it gives the theory's important concepts in a nutshell. The free riders are something an efficient community needs to lessen, and revealed preferences are a necessity to know what services to offer and the revealed aggregation of preference is important to know who the target market is or to whom the services should be offered. These concepts ultimately lead to Mr. Tiebout's assumption that a Local Government's local expenditure issues can be resolved with an economic solution rather than a political solution. It is a theoretical practice that can be observed on a small scale or on the world stage were goods and services are becoming more and more competitive when observed from an economic viewpoint.

View the original article here

In New York, a Microdistillery Brings Cheer to the Local Economy

Ralph Erenzo didn't want to make booze. But he didn't have much choice.

As Tuthilltown Spirits' spokesperson Robin Hayes tells it, the distillery's story began in 2001, when Erenzo bought 36 acres of land in Gardiner, N.Y. Located near the Hudson River and Minnewaska State Park, the small farm was well situated for hikers and mountain climbers, and Erenzo planned to open a bed and breakfast. Unfortunately, his neighbors weren't eager to see their tiny town overrun by outdoorsmen and took him to court. Two years later, his bank account had dwindled, and he was down to the last eight acres, having sold the rest to pay his lawyers.

Desperate to turn a profit on the rapidly shrinking farm, Erenzo asked the town's enforcement officer what he could legally do with the property. New York state law allows farms to operate small wineries, so the officer suggested that Erenzo try his hand at winemaking.

Ultimately, though, Erenzo did him one better: A 2002 New York State law, based on the winemaking license, allowed farms to operate small distilleries with a maximum yearly output of 35,000 proof-gallons of liquor. Partnering with former engineer Brian Lee, Erenzo became one of the first New Yorkers to take advantage of the new law, and Tuthilltown Spirits was born.

Being Neighborly

One requirement of the farm distiller's license is that 50% of the distillery's raw materials have to be grown in New York state. Given Erenzo's disputes with the neighbors, one might think that Tuthilltown wouldn't be eager to work with local farmers, but the opposite was true. In the seven years that it has been in business, the company has formed a very close relationship with nearby growers, and Tuthilltown Production Manager Joel Elder estimates that 85% of the company's raw materials -- including corn, potatoes, wheat, rye and apples -- come from farms located within three miles of the distillery.

The only major item that Tuthilltown doesn't locally source is malted barley, a problem that Elder laments: "It's nearly impossible to find a good malted barley source in the U.S., and shipping from American farms is expensive." In fact, Elder notes that the cheapest, most local supplier is in Canada: "It's closer than American producers, costs less to ship and has a comparable price."

The barley problem has thrown a serious wrench in Tuthilltown's plans to locally source all of its ingredients, but Elder has a solution: "We want to start growing our own barley or encourage a nearby farmer to start growing it." Not only will this help maintain the company's "locavore" ideal but it'll also help the surrounding economy, an issue that's very important to Tuthilltown.

Elder emphasizes that "Our heart is with local agriculture. Any development at our company is tied to local agriculture and the local economy."

Building a Distillery, Expanding an Economy

Elder insists that "involvement with local growers isn't a marketing strategy. It's a survival strategy." In addition to cutting shipping costs and increasing freshness, it has given the distillery an amazing level of control over its ingredients. For example, when Tuthilltown wanted to experiment with open-pollinated heirloom grain, it contracted a local farmer, agreeing to absorb the costs of the attempt. "By subsidizing the experiment," Elder notes, "we gave them enough confidence to try a project that might not pan out."

These types of relationships have had a long-term effect on both the distillery and its neighbors. While Tuthilltown makes liquor from local apples, Elder notes that the McIntosh, Gala and Empire apples that nearby farmers grow aren't ideal for its uses. When a local orchard expressed an interest in developing an organic, self-picking operation, Tuthilltown convinced it to start growing heirloom apple species that were more suitable for its spirits.

Elder notes that the move "Helped the farmers and helped us. We got the apples we wanted, and they were able to develop a lucrative operation."

A Deep-Pocketed Partner From Scotland

Tuthilltown has also brought outside capital into the region. Recognizing that it needed to improve its cash flow if it hoped to grow, it agreed to partner with William Grant and Sons, the Scotland-based premium liquor company that owns Hendrick's gin, Glenfiddich Scotch and Stolichnaya vodka. Impressed with Grant's lineup and struck by its commitment to quality, Tuthilltown sold its popular "Hudson whiskey" line to the larger company. Under the terms of the agreement, Grant owns the brands, but Tuthilltown will continue to produce them.

While the Grant deal helped Tuthilltown to slightly upgrade its facilities, Elder points out that its biggest impact has been the massive increase in cash flow. "Previously, we were able to work when we could afford to procure ingredients," he notes. "Now we can distill constantly."

On a larger scale, the relationship between Grant and Tuthilltown has also poured money into the local economy. It has funded Tuthilltown's experiments with local farmers, and the distillery's increased production has been a boon for the area's growers, whose grains feed the company's cookers and stills.

Stop By and Visit

Now a significant economic force in the area, Tuthilltown has also built a stronger relationship with its neighbors. Perhaps the greatest sign of this increased friendliness lies in the distillery's growing popularity as a tourist site. In 2009, following years of lobbying, the New York state legislature passed a law allowing microdistilleries to host tasting rooms and offer tours. To celebrate, Tuthilltown invited the public to the distillery, where fans had the opportunity to harvest rye and see where the grain is transformed into liquor.

In the year-and-a-half since the tasting room law passed, Tuthilltown has drawn whiskey afficionadoes from around the world. But what effect has this stream of tourists had on the sleepy town that once fought against Ralph Erenzo's small bed and breakfast? "So far," spokesperson Hayes laughs, "There has been no word from the neighbors."
See the full Special Report:
From Prohibition to Microdistilleries: Changing How America Drinks
How New York's Microdistillery Law Is Building a New Industry
Pennsylvania's Small Liquor Makers Bottle a Heritage
Colorado's Microdistilleries Follow an All-American Path View all Articles » Bruce Watson is a features writer for DailyFinance, focusing on the political and cultural effects of economic events. A contributor to Military Lessons of the Persian Gulf War, A Chronology of the Cold War at Sea, the Journal of American Philosophy, A Cafe in Space, and the forthcoming Peanut Butter, Gooseberries, and Latkes! He has also worked as a research assistant in the British House of Commons and at the United States Naval Institute.

Read More

View the original article here

The Big Society Bail-In brings protest to your local bank | Ruth Griffiths

UK Uncut has launched the Big Society Bail-In and will be targetting banks. Photograph: Chris Ratcliffe/Rex Features

Look through the newspapers this month and two points will become immediately clear. First, the government is cutting, privatising and changing the very nature of social security and public goods that were won through the 20th century. Every aspect of what was fought for by generations seems under threat – from selling off the forests, privatising health provision, closing the libraries and swimming pools, and scrapping rural bus routes.

Second, the banks are doing just fine. February is bankers' bonus month; Barclays announces their gifts to themselves on the 15th, with its chief executive, Bob Diamond, expecting £9m just for him. While RBS is due to transfer its £900m bonus pool into the pockets of high-earning bankers on the 25th. These bonuses should make the disgrace of the MPs' expenses scandal look like chicken feed and are another demonstration of just how much we really are not all in this together.

The two, of course, are linked. Because it was our broken banking system, with its greed and reckless gambling, that caused the crash. The National Audit Office has reported that at its peak, the amount of support provided to the banks reached nearly £1tn. In 2009 alone, £131bn of public money was spent keeping the banking industry afloat – and taxpayers continue to spend money supporting the banking system. But instead of asking the banks to pay for their crisis, it is the public who were asked to support the banks that are now being made to pay a further price.

The £2.5bn so-called "raid" on the banks is a levy of around 0.075% of their balance sheets. That's pathetic. Since 2007 and the Northern Rock crash, it's been abundantly obvious that the banking system is unjust to the core: from exorbitant bankers' bonuses to gambling on debt, from massive tax loopholes to holding the country to ransom with their threats of moving to Zurich. Before the crisis, after the crisis, it's as if we've learned nothing: the banks still serve themselves, not the public.

Over the past four months UK Uncut has grown from a meeting in a pub to hundreds of high-street acts of protest against tax avoiders, highlighting the £25bn dodged in taxes every single year by some of the most wealthy individuals and profitable corporations. Combine this clamping down on tax avoidance with truly tough action on the banks and you've got a genuine alternative to the cuts agenda. It is simply a lie to say that the only way to reduce the deficit is to sacrifice essential public services, which support some of the poorest in our society. There is an alternative, but the government doesn't want to talk about it because they have got the same agenda as the banks: making the poor pay the way for the rich.

This is an outrage and it has to be stopped. UK Uncut has launched the Big Society Bail-In. On 19 February we will be targeting Barclays, and on 26 February we will turn to RBS. Civil disobedience is back in Britain, and it is on your local high streets. Just like with Vodafone and Topshop, anyone can get involved, because tax-avoiding corporations and banks have put their outlets and branches everywhere. Every time a library is closed, every time a hospital is privatised, there's somewhere nearby where people can protest – your friendly local high street.

Together, we're going to change those high-street branches into schools, libraries, gyms and forests. We're going to show that it's our society that is too big to fail, not our broken banking system. It's going to be fun, but it's also going to be hard work, because this isn't just about Twitter – it never was. It's about on the street, grassroots, getting-in-the-way politics, the same politics that won women suffrage, defeated the poll tax and could stop the cuts.

It's about telling your friends, your co-workers, your children, your mum. It's about knowing why our welfare state is being attacked and targeting the right people in response. Everyone should do what they can do to make this happen. Come on the UK Uncut protests this month, and also make sure you're taking to the streets on 26 March. Let's make the banks pay for their crisis.

View the original article here

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.